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Nowegian Subsidized Theatres - Failure or Future?

During
the period 1972-1999 the number of Norwegian subsidized theatres was more than
doubled, while the attendance was largely unchanged. Mainly due to new
institutions established during this period, the number of performances
increased by about 45%. With about the same total attendance, this means that
the attendance per performance decreased by about the same percentage. The
number of employees (not counting engaged persons) increased by about 60%. All
in all this led to an almost trebling of both costs and public support in real
terms. This study deals with possible explanations of this distressing
development. Contrary to what is commonly assumed, the new theatres, with
cost-disadvantages of small scale, is only part of the explanation. We provide
two main explanations: The crowding out of the subsidized theatres by AV-media
and other performing art institutions, like private theatres and independent
performing arts groups, and by other entertainment institutions. In addition,
costs have increased substantially due to slow adjustment to reduction in
demand, costly arrangements to counter the crowding out effects, and
institutional sclerosis. The latter seems to be due to various cost-increasing
arrangements commonly found in public institutions with soft
budget-constraints, as well as in private monopolies and private firms
sheltered by regulations of various kinds.